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Business Wire
23-07-2025
- Business
- Business Wire
Annaly Capital Management, Inc. Reports 2nd Quarter 2025 Results
NEW YORK--(BUSINESS WIRE)--Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") today announced its financial results for the quarter ended June 30, 2025. Financial Highlights GAAP net income of $0.03 per average common share for the quarter Earnings available for distribution ("EAD") of $0.73 per average common share for the quarter Economic return of 0.7% for the second quarter; 3.7% economic return for the first half of the year Book value per common share of $18.45 GAAP leverage of 7.1x, up from 6.8x in the prior quarter; economic leverage of 5.8x, up from 5.7x in the prior quarter Common stock cash dividend of $0.70 per share for the second quarter Business Highlights Investment and Strategy Total portfolio of $89.5 billion, including $79.5 billion in highly liquid Agency portfolio (1) Annaly's Agency portfolio increased by 6%, representing 62% of dedicated capital (2), with accretive capital raised deployed into both specified pools and TBAs across 4.5% through 6.0% coupon securities Hedge portfolio remained defensively positioned with 92% hedge ratio; added hedges to correspond with assets purchased throughout the quarter and to manage upward pressure on long-end Treasury yields while maintaining a balanced mix of swaps and Treasuries at the long end of the yield curve Annaly's Residential Credit portfolio relatively unchanged at $6.6 billion (1) driven by record quarterly securitization issuance; correspondent channel activity remained strong with lock volume and total funded volume in line with the prior quarter at $5.3 billion and $3.7 billion, respectively Annaly's MSR portfolio unchanged at $3.3 billion in market value, representing 19% of dedicated capital (2) Financing and Capital $7.4 billion of total assets available for financing (3), including cash and unencumbered Agency MBS of $4.7 billion Annaly Residential Credit Group priced seven securitizations totaling a record $3.6 billion during the second quarter Annaly remained the largest non-bank issuer and the second largest issuer overall of Prime Jumbo and Expanded Credit MBS year-to-date (4) Since the end of the first quarter, Annaly's Residential Credit and MSR businesses increased financing capacity by $500 million through new and expanded credit facilities; total warehouse capacity across both Annaly's Residential Credit and MSR businesses of $6.2 billion, including $2.6 billion of committed capacity Average GAAP cost of interest-bearing liabilities of 4.76%, down 1 basis point quarter-over-quarter, and average economic cost of interest-bearing liabilities of 3.94%, up 6 basis points quarter-over-quarter Raised $761 million of accretive common equity through the Company's at-the-market sales program during the quarter (5) Corporate Governance Appointed Thomas Hamilton as Independent Chair of the Board of Directors following the 2025 Annual Meeting of Stockholders in May "Despite significant intra-quarter volatility across financial markets, Annaly delivered its seventh consecutive quarter with a positive economic return, underscoring the benefits of holding our Agency, Residential Credit and MSR strategies together on balance sheet," stated Chief Executive Officer & Co-Chief Investment Officer David Finkelstein. "Our Agency portfolio grew by nearly $5 billion as we were able to deploy accretive capital raised into the sector. Residential Credit experienced another record quarter of origination and securitization activity as Onslow Bay furthers its leadership across the non-Agency market. Meanwhile, our MSR portfolio continued to generate substantial cash flow while we expand our flow, subservicing and recapture partners. Looking forward, we remain encouraged by opportunities across our three investment strategies and believe our diversified housing finance portfolio can continue to generate industry leading risk-adjusted returns." (1) Total portfolio represents Annaly's investments that are on-balance sheet as well as investments that are off-balance sheet in which Annaly has economic exposure. Agency assets include TBA purchase contracts (market value) of $7.8 billion. Residential Credit assets exclude assets transferred or pledged to securitization vehicles of $27.0 billion, include $2.7 billion of retained securities that are eliminated in consolidation and are shown net of participations issued totaling $1.6 billion. MSR assets include unsettled MSR commitments of $21 million. MSR commitments represent the market value of deals where Annaly has executed a letter of intent. There can be no assurance whether these deals will close or when they will close. (2) Capital allocation for each of the investment strategies is calculated as the difference between each investment strategy's allocated assets, which include TBA purchase contracts, and liabilities. (3) Comprised of $5.9bn of unencumbered assets, which represents Annaly's excess liquidity and defined as assets that have not been pledged or securitized (generally including cash and cash equivalents, Agency MBS, CRT, Non-Agency MBS, residential mortgage loans, MSR, reverse repurchase agreements, other unencumbered financial assets and capital stock), and $1.5bn of fair value of collateral pledged for future advances. (4) Issuer ranking data from Inside Nonconforming Markets from 2024 to Q2 2025 (July 11, 2025 issue). Used with permission. Expand Financial Performance The following table summarizes certain key performance indicators as of and for the quarters ended June 30, 2025, March 31, 2025 and June 30, 2024: * Represents a non-GAAP financial measure. Please refer to the "Non-GAAP Financial Measures" section for additional information. (1) Net of dividends on preferred stock. (2) Annualized GAAP return on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return on average equity is 0.45%, 1.01%, and (0.08%) for the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. (3) GAAP leverage is computed as the sum of repurchase agreements, other secured financing, debt issued by securitization vehicles, participations issued, and U.S. Treasury securities sold, not yet purchased divided by total equity. Economic leverage is computed as the sum of recourse debt, cost basis of to-be-announced ("TBA") derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, and US Treasury securities, sold, not yet purchased. Debt issued by securitization vehicles and participations issued are non-recourse to the Company and are excluded from economic leverage. (4) Net interest margin represents interest income less interest expense divided by average Interest Earning Assets. Net interest margin does not include net interest component of interest rate swaps. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income and less economic interest expense divided by the sum of average Interest Earning Assets plus average outstanding TBA contract balances. PAA represents the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company's Agency mortgage-backed securities. (5) Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA). (6) Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss). Net interest on variation margin related to interest rate swaps is included in the Net interest component of interest rate swaps in the Company's Consolidated Statements of Comprehensive Income (Loss). Expand Other Information This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," or similar terms or variations on those terms or the negative of those terms. Such statements include those relating to the Company's future performance, macro outlook, the interest rate and credit environments, tax reform and future opportunities. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities ("MBS") and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of the Company's assets; changes in business conditions and the general economy; the Company's ability to grow its residential credit business; the Company's ability to grow its mortgage servicing rights business; credit risks related to the Company's investments in credit risk transfer securities and residential mortgage-backed securities and related residential mortgage credit assets; risks related to investments in mortgage servicing rights; the Company's ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting the Company's business; the Company's ability to maintain its qualification as a REIT for U.S. federal income tax purposes; the Company's ability to maintain its exemption from registration under the Investment Company Act of 1940; and operational risks or risk management failures by us or critical third parties, including cybersecurity incidents. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Annaly is a leading diversified capital manager with investment strategies across mortgage finance. Annaly's principal business objective is to generate net income for distribution to its stockholders and to optimize its returns through prudent management of its diversified investment strategies. Annaly is internally managed and has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Additional information on the company can be found at We use our website ( and LinkedIn account ( as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about Annaly when you enroll your email address by visiting the "News & Insights" section of our website, then clicking on "Subscribe" and completing the email notification form. Our website, any alerts and social media channels are not incorporated by reference into, and are not a part of, this document. The Company prepares an investor presentation and financial supplement for the benefit of its shareholders. Please refer to the investor presentation for definitions of both GAAP and non-GAAP measures used in this news release. Both the Second Quarter 2025 Investor Presentation and the Second Quarter 2025 Financial Supplement can be found at the Company's website ( in the "Investors" section under "Investor Presentations." Conference Call The Company will hold the second quarter 2025 earnings conference call on July 24, 2025 at 9:00 a.m. Eastern Time. Participants are encouraged to pre-register for the conference call to receive a unique PIN to gain immediate access to the call and bypass the live operator. Pre-registration may be completed by accessing the pre-registration link found on the homepage or "Investors" section of the Company's website at or by using the following link: Pre-registration may be completed at any time, including up to and after the call start time. For participants who would like to join the call but have not pre-registered, access is available by dialing 844-735-3317 within the U.S., or 412-317-5703 internationally, and requesting the "Annaly Earnings Call." There will also be an audio webcast of the call on A replay of the call will be available for one week following the conference call. The replay number is 877-344-7529 for domestic calls and 412-317-0088 for international calls and the conference passcode is 3172987. If you would like to be added to the e-mail distribution list, please visit click on News & Insights, then select Subscribe and complete the email notification form. Expand (1) Derived from the audited consolidated financial statements at December 31, 2024. (2) 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock - Includes 28,800,000 shares authorized, issued and outstanding. 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock - Includes 17,000,000 shares authorized, issued and outstanding. 6.75% Series I Preferred Stock - Includes 17,700,000 shares authorized, issued and outstanding. (3) Includes 1,468,250,000 shares authorized. Includes 642,076,127 shares issued and outstanding at June 30, 2025, 602,338,286 shares issued and outstanding at March 31, 2025, 578,357,118 shares issued and outstanding at December 31, 2024, 558,047,743 at September 30, 2024, and 501,018,415 shares issued and outstanding at June 30, 2024. Expand ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (dollars in thousands, except per share data) (Unaudited) For the quarters ended June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 September 30, 2024 Net interest income Interest income $ 1,418,893 $ 1,317,108 $ 1,338,880 $ 1,229,341 $ 1,177,325 Interest expense 1,145,693 1,097,137 1,151,592 1,215,940 1,123,767 Net interest income 273,200 219,971 187,288 13,401 53,558 Net servicing income Servicing and related income 141,670 140,435 127,224 122,583 120,515 Servicing and related expense 14,571 14,113 11,648 12,988 12,617 Net servicing income 127,099 126,322 115,576 109,595 107,898 Other income (loss) Net gains (losses) on investments and other 83,503 810,812 (2,010,426 ) 1,723,713 (568,745 ) Net gains (losses) on derivatives (388,785 ) (977,867 ) 2,215,680 (1,754,010 ) 430,487 Other, net 15,812 7,398 19,339 27,438 24,791 Total other income (loss) (289,470 ) (159,657 ) 224,593 (2,859 ) (113,467 ) General and administrative expenses Compensation expense 36,583 37,297 33,955 34,453 33,274 Other general and administrative expenses 13,435 10,767 10,019 9,468 11,617 Total general and administrative expenses 50,018 48,064 43,974 43,921 44,891 Income (loss) before income taxes 60,811 138,572 483,483 76,216 3,098 Income taxes 440 8,267 10,407 (6,135 ) 11,931 Net income (loss) 60,371 130,305 473,076 82,351 (8,833 ) Net income (loss) attributable to noncontrolling interests 3,272 6,081 (8,976 ) 15,906 650 Net income (loss) attributable to Annaly 57,099 124,224 482,052 66,445 (9,483 ) Dividends on preferred stock 37,260 37,157 38,704 41,628 37,158 Net income (loss) available (related) to common stockholders $ 19,839 $ 87,067 $ 443,348 $ 24,817 $ (46,641 ) Net income (loss) per share available (related) to common stockholders Basic $ 0.03 $ 0.15 $ 0.78 $ 0.05 $ (0.09 ) Diluted $ 0.03 $ 0.15 $ 0.78 $ 0.05 $ (0.09 ) Weighted average number of common shares outstanding Basic 620,208,712 587,149,704 569,201,592 515,729,658 500,950,563 Diluted 621,103,218 588,420,998 570,651,985 516,832,152 500,950,563 Other comprehensive income (loss) Net income (loss) $ 60,371 $ 130,305 $ 473,076 $ 82,351 $ (8,833 ) Unrealized gains (losses) on available-for-sale securities 33,559 164,877 (337,121 ) 428,955 (54,243 ) Reclassification adjustment for net (gains) losses included in net income (loss) 13,797 65,403 31,642 15,769 179,234 Other comprehensive income (loss) 47,356 230,280 (305,479 ) 444,724 124,991 Comprehensive income (loss) 107,727 360,585 167,597 527,075 116,158 Comprehensive income (loss) attributable to noncontrolling interests 3,272 6,081 (8,976 ) 15,906 650 Comprehensive income (loss) attributable to Annaly 104,455 354,504 176,573 511,169 115,508 Dividends on preferred stock 37,260 37,157 38,704 41,628 37,158 Comprehensive income (loss) attributable to common stockholders $ 67,195 $ 317,347 $ 137,869 $ 469,541 $ 78,350 Expand For the six months ended June 30, 2025 June 30, 2024 (unaudited) (unaudited) Net interest income Interest income $ 2,736,001 $ 2,271,813 Interest expense 2,242,830 2,224,706 Net interest income 493,171 47,107 Net servicing income Servicing and related income 282,105 235,599 Servicing and related expense 28,684 24,833 Net servicing income 253,421 210,766 Other income (loss) Net gains (losses) on investments and other 894,315 (1,562,872 ) Net gains (losses) on derivatives (1,366,652 ) 1,807,631 Other, net 23,210 48,158 Total other income (loss) (449,127 ) 292,917 General and administrative expenses Compensation expense 73,880 61,995 Other general and administrative expenses 24,202 21,466 Total general and administrative expenses 98,082 83,461 Income (loss) before income taxes 199,383 467,329 Income taxes 8,707 10,988 Net income (loss) 190,676 456,341 Net income (loss) attributable to noncontrolling interests 9,353 2,932 Net income (loss) attributable to Annaly 181,323 453,409 Dividends on preferred stock 74,417 74,219 Net income (loss) available (related) to common stockholders $ 106,906 $ 379,190 Net income (loss) per share available (related) to common stockholders Basic $ 0.18 $ 0.76 Diluted $ 0.18 $ 0.76 Weighted average number of common shares outstanding Basic 603,770,531 500,781,701 Diluted 604,882,295 501,415,515 Other comprehensive income (loss) Net income (loss) $ 190,676 $ 456,341 Unrealized gains (losses) on available-for-sale securities 198,436 (336,112 ) Reclassification adjustment for net (gains) losses included in net income (loss) 79,200 514,585 Other comprehensive income (loss) 277,636 178,473 Comprehensive income (loss) 468,312 634,814 Comprehensive income (loss) attributable to noncontrolling interests 9,353 2,932 Comprehensive income (loss) attributable to Annaly 458,959 631,882 Dividends on preferred stock 74,417 74,219 Comprehensive income (loss) attributable to common stockholders $ 384,542 $ 557,663 Expand Key Financial Data The following table presents key metrics of the Company's portfolio, liabilities and hedging positions, and performance as of and for the quarters ended June 30, 2025, March 31, 2025 and June 30, 2024: June 30, 2025 March 31, 2025 June 30, 2024 Portfolio related metrics Fixed-rate Residential Securities as a percentage of total Residential Securities 99 % 99 % 98 % Adjustable-rate and floating-rate Residential Securities as a percentage of total Residential Securities 1 % 1 % 2 % Weighted average experienced CPR for the period 8.7 % 7.1 % 7.4 % Weighted average projected long-term CPR at period-end 9.1 % 9.5 % 8.5 % Liabilities and hedging metrics Weighted average days to maturity on repurchase agreements outstanding at period-end 49 50 36 Hedge ratio (1) 92 % 95 % 98 % Weighted average pay rate on interest rate swaps at period-end (2) 3.14 % 2.98 % 3.13 % Weighted average receive rate on interest rate swaps at period-end (2) 4.47 % 4.43 % 5.30 % Weighted average net rate on interest rate swaps at period-end (2) (1.33 %) (1.45 %) (2.17 %) GAAP leverage at period-end (3) 7.1:1 6.8:1 7.1:1 GAAP capital ratio at period-end (4) 12.0 % 12.4 % 12.0 % Performance related metrics Book value per common share $ 18.45 $ 19.02 $ 19.25 GAAP net income per average common share (5) $ 0.03 $ 0.15 $ (0.09 ) Annualized GAAP return on average equity (6) 1.82 % 4.04 % (0.31 %) Net interest margin (7) 1.04 % 0.87 % 0.24 % Average yield on interest earning assets (8) 5.42 % 5.18 % 5.17 % Average GAAP cost of interest bearing liabilities (9) 4.76 % 4.77 % 5.43 % Net interest spread 0.66 % 0.41 % (0.26 %) Dividend declared per common share $ 0.70 $ 0.70 $ 0.65 Annualized dividend yield (10) 14.88 % 13.79 % 13.64 % Non-GAAP metrics * Earnings available for distribution per average common share (5) $ 0.73 $ 0.72 $ 0.68 Annualized EAD return on average equity (excluding PAA) 14.86 % 14.43 % 13.36 % Economic leverage at period-end (3) 5.8:1 5.7:1 5.8:1 Economic capital ratio at period end (4) 14.3 % 14.8 % 14.4 % Net interest margin (excluding PAA) (7) 1.71 % 1.69 % 1.58 % Average yield on interest earning assets (excluding PAA) (8) 5.41 % 5.23 % 5.14 % Average economic cost of interest bearing liabilities (9) 3.94 % 3.88 % 3.90 % Net interest spread (excluding PAA) 1.47 % 1.35 % 1.24 % Expand * Represents a non-GAAP financial measure. Please refer to the "Non-GAAP Financial Measures" section for additional information. (1) Measures total notional balances of interest rate swaps, interest rate swaptions (excluding receiver swaptions), futures and U.S. Treasury securities sold, not yet purchased, relative to repurchase agreements, other secured financing, cost basis of TBA derivatives outstanding and net forward purchases (sales) of investments; excludes MSR and the effects of term financing, both of which serve to reduce interest rate risk. Additionally, the hedge ratio does not take into consideration differences in duration between assets and liabilities. (2) Excludes forward starting swaps. (3) GAAP leverage is computed as the sum of repurchase agreements, other secured financing, debt issued by securitization vehicles, participations issued, and U.S. Treasury securities sold, not yet purchased divided by total equity. Economic leverage is computed as the sum of recourse debt, cost basis of to-be-announced ("TBA") derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, and U.S. Treasury securities sold, not yet purchased. Debt issued by securitization vehicles and participations issued are non-recourse to the Company and are excluded from economic leverage. (4) GAAP capital ratio is computed as total equity divided by total assets. Economic capital ratio is computed as total equity divided by total economic assets. Total economic assets include the implied market value of TBA derivatives and are net of debt issued by securitization vehicles and participations issued. (5) Net of dividends on preferred stock. (6) Annualized GAAP return on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return on average equity is 0.45%, 1.01% and (0.08%) for the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. (7) Net interest margin represents interest income less interest expense divided by average interest earning assets. Net interest margin does not include net interest component of interest rate swaps. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract balances. (8) Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA). (9) Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss). Net interest on variation margin related to interest rate swaps is included in the Net interest component of interest rate swaps in the Company's Consolidated Statements of Comprehensive Income (Loss). (10) Based on the closing price of the Company's common stock of $18.82, $20.31 and $19.06 at June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Expand The following table contains additional information on our investment portfolio as of the dates presented: Non-GAAP Financial Measures To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company provides the following non-GAAP measures: earnings available for distribution ("EAD"); earnings available for distribution attributable to common stockholders; earnings available for distribution per average common share; annualized EAD return on average equity; economic leverage; economic capital ratio; interest income (excluding PAA); economic interest expense; economic net interest income (excluding PAA); average yield on interest earning assets (excluding PAA); average economic cost of interest bearing liabilities; net interest margin (excluding PAA); and net interest spread (excluding PAA). These measures should not be considered a substitute for, or superior to, financial measures computed in accordance with GAAP. While intended to offer a fuller understanding of the Company's results and operations, non-GAAP financial measures also have limitations. For example, the Company may calculate its non-GAAP metrics, such as earnings available for distribution, or the PAA, differently than its peers making comparative analysis difficult. Additionally, in the case of non-GAAP measures that exclude the PAA, the amount of amortization expense excluding the PAA is not necessarily representative of the amount of future periodic amortization nor is it indicative of the term over which the Company will amortize the remaining unamortized premium. Changes to actual and estimated prepayments will impact the timing and amount of premium amortization and, as such, both GAAP and non-GAAP results. These non-GAAP measures provide additional detail to enhance investor understanding of the Company's period-over-period operating performance and business trends, as well as for assessing the Company's performance versus that of industry peers. Additional information pertaining to the Company's use of these non-GAAP financial measures, including discussion of how each such measure may be useful to investors, and reconciliations to their most directly comparable GAAP results are provided below. Earnings available for distribution, earnings available for distribution attributable to common stockholders, earnings available for distribution per average common share and annualized EAD return on average equity The Company's principal business objective is to generate net income for distribution to its stockholders and to preserve capital through prudent selection of investments and continuous management of its portfolio. The Company generates net income by earning a net interest spread on its investment portfolio, which is a function of interest income from its investment portfolio less financing, hedging and operating costs. Earnings available for distribution, which is defined as the sum of (a) economic net interest income, (b) TBA dollar roll income, (c) net servicing income less realized amortization of MSR, (d) other income (loss) (excluding amortization of intangibles, non-EAD income allocated to equity method investments and other non-EAD components of other income (loss)), (e) general and administrative expenses (excluding transaction expenses and non-recurring items), and (f) income taxes (excluding the income tax effect of non-EAD income (loss) items) and excludes (g) the premium amortization adjustment ("PAA") representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company's Agency mortgage-backed securities is used by the Company's management and, the Company believes, used by analysts and investors to measure its progress in achieving its principal business objective. The Company seeks to fulfill this objective through a variety of factors including portfolio construction, the degree of market risk exposure and related hedge profile, and the use and forms of leverage, all while operating within the parameters of the Company's capital allocation policy and risk governance framework. The Company believes these non-GAAP measures provide management and investors with additional details regarding the Company's underlying operating results and investment portfolio trends by (i) making adjustments to account for the disparate reporting of changes in fair value where certain instruments are reflected in GAAP net income (loss) while others are reflected in other comprehensive income (loss) and (ii) by excluding certain unrealized, non-cash or episodic components of GAAP net income (loss) in order to provide additional transparency into the operating performance of the Company's portfolio. In addition, EAD serves as a useful indicator for investors in evaluating the Company's performance and ability to pay dividends. Annualized EAD return on average equity, which is calculated by dividing earnings available for distribution over average stockholders' equity, provides investors with additional detail on the earnings available for distribution generated by the Company's invested equity capital. * Represents a non-GAAP financial measure. (1) Includes write-downs or recoveries on investments which are reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss). (2) The adjustment to add back Net (gains) losses on derivatives does not include the net interest component of interest rate swaps which is reflected in earnings available for distribution. The net interest component of interest rate swaps totaled $185.7 million, $191.5 million and $298.4 million for the quarters ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. (3) The Company excludes non-EAD (income) loss allocated to equity method investments, which represents the unrealized (gains) losses allocated to equity interests in a portfolio of MSR, which is a component of Other, net. (4) Represents costs incurred in connection with securitizations of residential whole loans. (5) TBA dollar roll income represents a component of Net gains (losses) on derivatives. (6) MSR amortization utilizes purchase date cash flow assumptions and actual unpaid principal balances and is calculated as the difference between projected MSR yield income and net servicing income for the period. (7) Annualized GAAP return (loss) on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return (loss) on average equity is 0.45%, 1.01%, and (0.08%) for the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. Expand From time to time, the Company enters into TBA forward contracts as an alternate means of investing in and financing Agency mortgage-backed securities. A TBA contract is an agreement to purchase or sell, for future delivery, an Agency mortgage-backed security with a specified issuer, term and coupon. A TBA dollar roll represents a transaction where TBA contracts with the same terms but different settlement dates are simultaneously bought and sold. The TBA contract settling in the later month typically prices at a discount to the earlier month contract with the difference in price commonly referred to as the "drop". The drop is a reflection of the expected net interest income from an investment in similar Agency mortgage-backed securities, net of an implied financing cost, that would be foregone as a result of settling the contract in the later month rather than in the earlier month. The drop between the current settlement month price and the forward settlement month price occurs because in the TBA dollar roll market, the party providing the financing is the party that would retain all principal and interest payments accrued during the financing period. Accordingly, TBA dollar roll income generally represents the economic equivalent of the net interest income earned on the underlying Agency mortgage-backed security less an implied financing cost. TBA dollar roll transactions are accounted for under GAAP as a series of derivatives transactions. The fair value of TBA derivatives is based on methods similar to those used to value Agency mortgage-backed securities. The Company records TBA derivatives at fair value on its Consolidated Statements of Financial Condition and recognizes periodic changes in fair value in Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss), which includes both unrealized and realized gains and losses on derivatives. TBA dollar roll income is calculated as the difference in price between two TBA contracts with the same terms but different settlement dates multiplied by the notional amount of the TBA contract. Although accounted for as derivatives, TBA dollar rolls capture the economic equivalent of net interest income, or carry, on the underlying Agency mortgage-backed security (interest income less an implied cost of financing). TBA dollar roll income is reported as a component of Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss). Premium Amortization Expense In accordance with GAAP, the Company amortizes or accretes premiums or discounts into interest income for its Agency mortgage-backed securities, excluding interest-only securities, multifamily and reverse mortgages, taking into account estimates of future principal prepayments in the calculation of the effective yield. The Company recalculates the effective yield as differences between anticipated and actual prepayments occur. Using third-party model and market information to project future cash flows and expected remaining lives of securities, the effective interest rate determined for each security is applied as if it had been in place from the date of the security's acquisition. The amortized cost of the security is then adjusted to the amount that would have existed had the new effective yield been applied since the acquisition date. The adjustment to amortized cost is offset with a charge or credit to interest income. Changes in interest rates and other market factors will impact prepayment speed projections and the amount of premium amortization recognized in any given period. The Company's GAAP metrics include the unadjusted impact of amortization and accretion associated with this method. Certain of the Company's non-GAAP metrics exclude the effect of the PAA, which quantifies the component of premium amortization representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term CPR. The following table illustrates the impact of the PAA on premium amortization expense for the Company's Residential Securities portfolio and residential securities transferred or pledged to securitization vehicles, for the quarters ended June 30, 2025, March 31, 2025 and June 30, 2024: Economic leverage and economic capital ratios The Company uses capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on its assets and the cost of its borrowings and hedging activities. The Company's capital structure is designed to offer an efficient complement of funding sources to generate positive risk-adjusted returns for its stockholders while maintaining appropriate liquidity to support its business and meet the Company's financial obligations under periods of market stress. To maintain its desired capital profile, the Company utilizes a mix of debt and equity funding. Debt funding may include the use of repurchase agreements, loans, securitizations, participations issued, lines of credit, asset backed lending facilities, corporate bond issuance, convertible bonds or other liabilities. Equity capital primarily consists of common and preferred stock. The Company's economic leverage ratio is computed as the sum of recourse debt, cost basis of TBA derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, and U.S. Treasury securities sold, not yet purchased. Debt issued by securitization vehicles and participations issued are non-recourse to the Company and are excluded from economic leverage. The following table presents a reconciliation of GAAP debt to economic debt for purposes of calculating the Company's economic leverage ratio for the periods presented: * Represents a non-GAAP financial measure. Expand The following table presents a reconciliation of GAAP total assets to economic total assets for purposes of calculating the Company's economic capital ratio for the periods presented: * Represents a non-GAAP financial measure. (1) Included in Derivative assets in the Company's Consolidated Statements of Financial Condition. Expand Interest income (excluding PAA), economic interest expense and economic net interest income (excluding PAA) Interest income (excluding PAA) represents interest income excluding the effect of the PAA, and serves as the basis for deriving average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA) and net interest margin (excluding PAA), which are discussed below. The Company believes this measure provides management and investors with additional detail to enhance their understanding of the Company's operating results and trends by excluding the component of premium amortization expense representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company's Agency mortgage-backed securities (other than interest-only securities, multifamily and reverse mortgages), which can obscure underlying trends in the performance of the portfolio. Economic interest expense includes GAAP interest expense, the net interest component of interest rate swaps (which includes net interest on variation margin related to interest rate swaps) and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss). The Company uses interest rate swaps to manage its exposure to changing interest rates on its repurchase agreements by economically hedging cash flows associated with these borrowings. Accordingly, adding the net interest component of interest rate swaps to interest expense, as computed in accordance with GAAP, reflects the total contractual interest expense and thus, provides investors with additional information about the cost of the Company's financing strategy. The Company may use market agreed coupon ("MAC") interest rate swaps in which the Company may receive or make a payment at the time of entering into such interest rate swap to compensate for the off-market nature of such interest rate swap. In accordance with GAAP, upfront payments associated with MAC interest rate swaps are not reflected in the net interest component of interest rate swaps in the Company's Consolidated Statements of Comprehensive Income (Loss). Similarly, economic net interest income (excluding PAA), as computed below, provides investors with additional information to enhance their understanding of the net economics of our primary business operations. * Represents a non-GAAP financial measure. (1) Interest on initial margin related to interest rate swaps is reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss). Expand Average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA), net interest margin (excluding PAA) and average economic cost of interest bearing liabilities Net interest spread (excluding PAA), which is the difference between the average yield on interest earning assets (excluding PAA) and the average economic cost of interest bearing liabilities, which represents annualized economic interest expense divided by average interest bearing liabilities, and net interest margin (excluding PAA), which is calculated as the sum of interest income (excluding PAA) plus TBA dollar roll income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract balances, provide management with additional measures of the Company's profitability that management relies upon in monitoring the performance of the business. Disclosure of these measures, which are presented below, provides investors with additional detail regarding how management evaluates the Company's performance. * Represents a non-GAAP financial measure. Expand
Yahoo
21-07-2025
- Business
- Yahoo
Annaly is Set to Report Q2 Earnings: What's in Store for the Stock?
Annaly Capital Management Inc. NLY is scheduled to report second-quarter 2025 results on July 23, after market close. The company's results are expected to reflect year-over-year increases in earnings and net interest income (NII) in the quarter to be reported. In the last reported quarter, the mortgage real estate investment trust (mREIT) posted earnings available for distribution per share of 72 cents, beating the Zacks Consensus Estimate. Improvements in the average yield on interest-earning assets supported results. However, the company registered a year-over-year decline in book value per share (BVPS). Annaly has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 2.60%. Annaly Capital Management Inc Price and EPS Surprise Annaly Capital Management Inc price-eps-surprise | Annaly Capital Management Inc Quote Let us see how things have shaped up prior to the second-quarter earnings announcement. Despite interest rate cuts by the Federal Reserve in 2024, mortgage rates did not come down meaningfully. In the second quarter, mortgage rates fluctuated, but they remained in the mid-to-upper 6% range. As such, refinancing activities and origination volumes witnessed decent growth. Amid this, a significant portion of NLY's MBS holdings is anticipated to have witnessed elevated levels of constant prepayment rate. This is expected to have positively impacted net premium amortization in the second quarter, thereby supporting growth in interest income and average asset yield. The consensus estimate for second-quarter NII is pegged at $410.5 million, suggesting a rise from the year-ago quarter's reported NII of $53.6 million. The primary-secondary spread has averaged 1.06% in the second quarter of 2025, below the first quarter's average of 1.12%. Due to increased volatility in the market, the primary-secondary spread may be slightly skewed. As such, NLY's gain on sale margins in the second quarter of 2025 are likely to have been relatively steady. With primary-secondary spreads relatively stable and increased mortgage rate volatility, Annaly is likely to have seen a decline in its book value per share in the quarter to be reported. Given the relatively lower prepayment speed, the company's mortgage servicing rights portfolio is likely to have been impacted positively to some extent. This is anticipated to have increased NLY's servicing fees in the quarter to be reported. The Zacks Consensus Estimate for net servicing income of $121 million indicates a year-over-year rise of 13%. What the Zacks Model Reveals for Annaly Our proven model does not show that an earnings beat is likely for NLY this time around. This is because the company does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Earnings ESP: Annaly has an Earnings ESP of 0.00%. Zacks Rank: Annaly currently carries a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for earnings has been unchanged at 71 cents. The metric indicates a year-over-year rise of 4.4%. NLY Peers Worth a Look A couple of Annaly peers that have the right combination of elements to post an earnings beat in the upcoming releases per our model are Angel Oak Mortgage REIT Inc. AOMR and ARMOUR Residential REIT, Inc. ARR. The Earnings ESP for AOMR is +3.70% and it currently carries a Zacks Rank #3. The company is expected to report second-quarter 2025 results on August 5. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar. ARR is expected to release second-quarter 2025 earnings on July 23. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.86%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ARMOUR Residential REIT, Inc. (ARR) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report Angel Oak Mortgage REIT Inc. (AOMR) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
CNBC
08-07-2025
- Business
- CNBC
Lightning Round: Lincoln Educational Services is where you want to be, says Jim Cramer
'Mad Money' host Jim Cramer weighs in on stocks including: Karman Holdings, Annaly, and Lincoln Educational Services.
CNBC
07-07-2025
- Business
- CNBC
Cramer's Lightning Round: 'You want to be' in Lincoln Educational Services
Karman Holdings: "The missile story's are the kind of companies that are making a lot of people a lot of money." Annaly Capital Management: "I have been against Annaly for many, many got a big yield, but I want to own growth." Lincoln Educational Services: "...That's where you want to be." Click here to download Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest
Yahoo
03-07-2025
- Business
- Yahoo
3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July
Dividend stocks have more than doubled up the average annual return of non-payers over the previous 51 years (1973-2024). Amid one of the priciest stock market's in history, amazing deals can still be found among ultra-high-yield income stocks -- i.e., those with yields of 5% or greater. Three high-octane dividend stocks, with yields ranging from 5.1% to 14.9%, have the right blend of macro and company-specific catalysts to thrive. 10 stocks we like better than Annaly Capital Management › For more than a century, Wall Street has been a bona fide wealth-creating machine. Though other asset classes, including bonds, commodities, and real estate, have also delivered positive long-term returns, none of these other investments has come particularly close to matching the average annual return of stocks over the last 100 years. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, there's probably one or more securities that can help investors meet their goals. But among the countless ways investors can grow their wealth on Wall Street, few have proved more successful over long periods than buying and holding high-quality dividend stocks. Companies that pay a regular dividend to their shareholders are typically profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have demonstrated their ability to navigate a challenging economic climate. Best of all, dividend stocks tend to outperform. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers from 1973 to 2024. They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%), and did so while being notably less volatile. Even with the benchmark S&P 500 hitting record highs, amazing deals can still be found among ultra-high-yield dividend stocks -- i.e., companies whose yields are at least four times higher than the current yield of the S&P 500 (1.24%, as of June 27). The following three ultra-high-yield stocks, which are sporting an average yield of 9.02%, make for no-brainer buys in July. The first sensational buy that income seekers can confidently add to their portfolios as we turn the page to the second-half of 2025 is mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY). While Annaly's nearly 14.9% yield may appear too good to be true, the company recently raised its quarterly payout and has averaged a double-digit yield over the trailing two decades. Throughout much of this decade, mortgage REITs have been disliked by Wall Street. This industry is highly sensitive to rapid changes in monetary policy and interest rates. The Federal Reserve increasing interest rates at the fastest clip in four decades from March 2022 to July 2023 increased short-term borrowing costs for companies like Annaly and lowered their net interest margin. The good news for Annaly Capital Management and its mortgage REIT peers is that we're entering a favorable environment for growth. The nation's central bank is now in a rate-easing cycle, and declining interest rates usually allow mortgage REITs to expand their net interest margin. In other words, they can still buy mortgage-backed securities with robust yields, but short-term borrowing costs tend to decline. Well-telegraphed monetary policy shifts during a rate-easing cycle are ideal for Annaly. Something else to consider is that Annaly Capital Management's $84.9 billion investment portfolio is heavily skewed toward highly liquid agency assets. An "agency" security is backed by the federal government in the unlikely event of default on the underlying asset. This added layer of protection is what affords Annaly the luxury of utilizing leverage to its advantage and pumping up its profits. With the innerworkings of the mortgage REIT industry becoming more favorable, Annaly trading at a slight discount to its book value, as of the March-ended quarter, makes it a smart buy for income-seeking investors. A second ultra-high-yield dividend stock that makes for a no-brainer buy in July is pharmaceutical titan Pfizer (NYSE: PFE). Its current yield tops 7% and looks to be sustainable, based on growth forecasts from management. Whereas the S&P 500 has rallied to a fresh record high, Pfizer stock has struggled under the weight of its own prior success. Investors sent shares of the company higher during the height of the COVID-19 pandemic for having developed a vaccine (Comirnaty) and oral therapy (Paxlovid). But between 2022 and 2024, combined sales of these COVID-19 therapeutics declined from more than $56 billion to $11 billion, respectively. Another drop-off is expected this year, with Paxlovid sales falling off in a big way in the March-ended quarter. While it might be unnerving to see Pfizer's COVID-19-related revenue decline, keep in mind that this area of focus didn't exist at the end of 2020. Any recurring sales from this segment is a bonus from where things stood 4.5 years ago. Furthermore, Pfizer's net sales from all segments actually grew by more than 50% between 2020 and 2024. In spite of weaker sales tied to its COVID-19 franchise, Pfizer's product portfolio, as a whole, is only getting stronger. On top of continued strength from Pfizer's specialty care segment, there's plenty of optimism that follows its $43 billion acquisition of cancer-drug developer Seagen in December 2023. This deal added more than $3 billion in annual sales, provides ample opportunity to boost margins via cost synergies, and should meaningfully bolster Pfizer's oncology pipeline. Ongoing improvements in cancer screening and diagnostics, coupled with strong pricing power for brand-name cancer drugs, bodes well for Pfizer's oncology division. The final piece of the puzzle is Pfizer's historically inexpensive valuation. Amid one of the priciest stock markets in history, shares of Pfizer can be scooped up for around 8 times forecast earnings in 2025 and 2026. This compares to an average forward price-to-earnings (P/E) ratio of 10.2 over the trailing-five-year period. The third ultra-high-yield dividend stock that stands out for all the right reasons and can be purchased with confidence by income investors in July is The Campbell's Company (NASDAQ: CPB). The 146-year-old food company formerly known as Campbell's Soup Company sports a nearly 5.1% dividend yield, which is an all-time high. Campbell's stock is effectively hovering at a 16-year low due to two factors. First, demand in the snack food category has recently weakened, which isn't unique Campbell's. The other issue (also not unique to Campbell's) is President Donald Trump's recently imposed steel tariffs, which are expected to take a bite out of the margins of food companies that can their products. While these are tangible headwinds, they're both relatively short-term in nature and overlook some of the factors that make The Campbell's Company a solid long-term investment. Perhaps the most obvious catalyst for Campbell's is that it sells basic need goods, such as food and beverages. No matter how well or poorly the U.S. economy and stock market perform, consumers need food and beverages to survive. This leads to highly predictable operating cash flow for Campbell's in any economic climate and makes it a particularly attractive stock to own during periods of heightened volatility and uncertainty. Furthermore, Campbell's went on the offensive last year to improve its product portfolio and make its operations more efficient. It announced the closure of a plant, as well as $230 million in investments through fiscal 2026 (Campbell's fiscal year usually ends in late July) in existing plants to bolster production efficiency and buoy margins. Ongoing innovation and the occasional acquisition are ways Campbell's looks to deliver volume growth and support the value of its brands. The valuation is also compelling. With Campbell's stock at levels not consistently witnessed since 2009, shares can be purchased for around 10 times forecast earnings this year. This equates to a 31% discount to the company's average forward P/E ratio over the past half-decade. Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $939,655!* Now, it's worth noting Stock Advisor's total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Sean Williams has positions in Annaly Capital Management and Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy. 3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July was originally published by The Motley Fool
